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Hedge Funds Are Selling Ferro Corporation (FOE)

Debasis Saha

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Ferro Corporation (NYSE:FOE) based on that data.

Ferro Corporation (NYSE:FOE) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 16 hedge funds' portfolios at the end of March. At the end of this article we will also compare FOE to other stocks including Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT), Livent Corporation (NYSE:LTHM), and The Cheesecake Factory Incorporated (NASDAQ:CAKE) to get a better sense of its popularity. Video: Watch our video about the top 5 most popular hedge fund stocks.

In the 21st century investor’s toolkit there are many indicators market participants have at their disposal to size up publicly traded companies. A duo of the less known indicators are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the top money managers can outperform the market by a healthy amount (see the details here).

[caption id="attachment_258176" align="aligncenter" width="400"] Leon Cooperman of Omega Advisors[/caption]

Leon Cooperman Omega Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to go over the recent hedge fund action surrounding Ferro Corporation (NYSE:FOE).

How are hedge funds trading Ferro Corporation (NYSE:FOE)?

At Q1's end, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2019. On the other hand, there were a total of 16 hedge funds with a bullish position in FOE a year ago. With hedgies' capital changing hands, there exists a few notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

Is FOE A Good Stock To Buy?

More specifically, GAMCO Investors was the largest shareholder of Ferro Corporation (NYSE:FOE), with a stake worth $41.7 million reported as of the end of September. Trailing GAMCO Investors was Omega Advisors, which amassed a stake valued at $29.9 million. Brigade Capital, Luminus Management, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Omega Advisors allocated the biggest weight to Ferro Corporation (NYSE:FOE), around 3.86% of its 13F portfolio. Cruiser Capital Advisors is also relatively very bullish on the stock, dishing out 1.31 percent of its 13F equity portfolio to FOE.

Since Ferro Corporation (NYSE:FOE) has experienced falling interest from the aggregate hedge fund industry, it's safe to say that there lies a certain "tier" of funds that slashed their full holdings last quarter. Interestingly, Alexander Mitchell's Scopus Asset Management dropped the largest stake of the 750 funds followed by Insider Monkey, valued at an estimated $10.6 million in stock, and Parvinder Thiara's Athanor Capital was right behind this move, as the fund dropped about $1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's now take a look at hedge fund activity in other stocks similar to Ferro Corporation (NYSE:FOE). We will take a look at Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT), Livent Corporation (NYSE:LTHM), The Cheesecake Factory Incorporated (NASDAQ:CAKE), and Waddell & Reed Financial, Inc. (NYSE:WDR). This group of stocks' market values match FOE's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RCKT,15,172485,-6 LTHM,15,34884,-1 CAKE,22,65962,-5 WDR,22,73802,1 Average,18.5,86783,-2.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $87 million. That figure was $118 million in FOE's case. The Cheesecake Factory Incorporated (NASDAQ:CAKE) is the most popular stock in this table. On the other hand Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT) is the least popular one with only 15 bullish hedge fund positions. Ferro Corporation (NYSE:FOE) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on FOE, though not to the same extent, as the stock returned 21.7% during the second quarter and outperformed the market.

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Disclosure: None. This article was originally published at Insider Monkey.

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